The Reserve Bank of India (RBI) has permitted resident individuals to make remittances under the Liberalised Remittance Scheme (LRS) to International Financial Services Centres (IFSCs) in the country.
The RBI decision is targeted at enhancing the financial markets of the IFSCs and providing resident individuals with an opportunity to diversify their portfolios. The Central Bank introduced the Liberalized Remittance System in 2004 in a bid to simplify and liberalize foreign exchange in India.
The RBI, in a notification, said it has reviewed the extant guidelines on LRS and decided to permit resident individuals to make remittances under LRS to IFSCs set up in India under the Special Economic Zone Act, 2005. "The remittance shall be made only for making investments in IFSCs in securities, other than those issued by entities/companies resident (outside IFSC) in India," the central bank said. Further, resident individuals may also open a non-interest bearing Foreign Currency Account (FCA) in IFSCs, for making the above permissible investments under LRS. "Any funds lying idle in the account for a period upto 15 days from the date of its receipt into the account shall be immediately repatriated to domestic INR account of the investor in India," RBI said.
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